Whisper it gently, but banks are rediscovering their taste for asset management. Last month, following Lloyds Bank’s sale of Scottish Widows Investment Partnership to Aberdeen Asset Management, HSBC chief executive Stuart Gulliver was quick to kill gossip that he planned a similar move.

HSBC: no sale of asset management

He said: “We’re not selling asset management. So asset management’s not going to be sold: it’s not for sale; it’s a key part of the wealth management proposition of the group, both for retail banking and also for private banking.” Got that straight, everyone?

HSBC is by no means alone. When Michele Faissola became chief executive of Deutsche Bank wealth and asset management in 2012, he reversed plans to sell large chunks of it, backed by predecessor Kevin Parker. He only plans to sell Tilney, a UK wealth business.

Unicredit is also planning to retain its business, according to it’s five-year strategic plan. That’s an about-turn: its plan to sell Pioneer Investments to French investors in 2011 was blocked by the Italian central bank. But Unicredit’s need for cash has eased.

Investment bankers don’t rule out further asset management disposals entirely but concede banks are happier with the status quo. Many of those that disposed of their asset management arms during the crisis, such as Barclays, now regret it.

They are impressed by the way central bank stimuli have been boosting fund sales of late. A few, like Royal Bank of Canada, Macquarie and Natixis have looked at acquisitions. UBS has invested heavily in investment strategies for its wealth division.

There is no shortage of consultants who say asset managers thrive when liberated from the clutches of a big bank. They have often been tortured by departmental heads keen to impress their seniors via restructurings. Profit-sharing is hard to achieve.

But none of this matters to banks capable of taking advantage of their distribution muscle to win and retain business from individual customers on fees that are double, or triple, the going rate for institutions.

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To see the dynamics at work, look at HSBC. Sridhar Chandrasekharan, chief executive of HSBC Global Asset Management, argues he can trust asset managers when his bank employs them.

HSBC did not enjoy a trouble-free credit crisis, but its brand is still powerful and stretches across the world. Lucrative emerging market business makes up $150 billion of HSBC Global assets totalling $420 billion.

The firm says two thirds of its funds, weighted for size, are ahead of their peer average, although many smaller funds are third quartile, according to data provider FE Analytics.

But performance records miss the point, argues Chandrasekharan. He is more concerned that his managers should stay true to a predetermined process, using quantitative styles with a human overlay.

It goes without saying, HSBC Global does not operate a star culture. That’s pretty common for bank-owned insurers, who don’t want the high overheads of a star culture because their focus is distribution, not sheer performance.

To tie down its clients, HSBC establishes their requirements through discussions rather than performance data. Its multi-asset products make extensive use of internal funds. When HSBC’s active managers fall short, passive styles and deposit accounts are on offer.

The upshot is HSBC’s brand keeps its asset management spinning, whatever the deficiencies of its asset managers. As long as its performance hovers between second and third quartile, the business will remain safe. It is more valuable to HSBC than any other bank. Which is why Stuart Gulliver wants to keep it. And it’s a model many others enjoy.

--This article first appeared in the print edition of Financial News dated December 2, 2013